Is the management function of designing the structure of the organization so that everyone can function together?
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Creating an Effective Organizational Structure
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Images Organization Design can drive efficiency and success in your business. Organization Design is a process for shaping the way organizations are structured and run. It involves many different aspects of life at work, including team formations, shift patterns, lines of reporting, decision-making procedures, communication channels, and more. Organization Design – and redesign – can help any type of organization to achieve its goals. Sometimes, a large-scale reorganization is necessary. At other points, more subtle shifts in structures and systems can ensure that an organization continues to thrive. In this article, we'll look at when and why Organization Design is necessary, how it can affect people, and how to implement it effectively. The Impact of Organization DesignOrganizational design involves implementing organizational structures and systems that align to an organization's core strategies. Often organization redesign happens because a business is growing or needs to downsize. However, it may also be because of a change in leadership, strategy, or due to changes in the organization's wider environment in which it operates. When organizational design is effective it can have a number of benefits, including:
However, if there are flaws in its design, an organization can suffer serious problems, including:
Even if a particular setup was successful in the past, that doesn't mean it will remain so for ever. As businesses develop, and as the world around them changes, it's vital that they keep a close eye on the way they're organized. And when it's no longer fit for purpose, that's the time to put a new phase of Organization Design into action. What Triggers Organizational Design?Organization design is often triggered by three common issues: 1. Changes in the EnvironmentChanges here could refer to internal or external changes. Perhaps you've bought some new technology, or a rival has entered your territory. Maybe an important piece of legislation affecting your business has changed. Some changes may be exciting, but some are worrying. However, they all require a response – and that likely means some alterations to the way you operate. 2. You've Launched a New StrategyAn organization might take the strategic decision to approach its work in a different way for any number of reasons. It might also change the ways it measures success. For example, a publishing company might decide to produce less in print, offer more free content online, and aim to generate more of its profits from advertising. In which case, it would have to set new goals for website engagement and advertising revenue, which would in turn trigger a need to redesign its organization and structure so that it could successfully achieve its new strategic goals. 3. Your Current Design Is Not Fit for PurposeChange is often gradual, but at some point in time, a "tipping point" is reached at which the organization recognizes a need to adapt to such changes. Perhaps you're organization has continued to uphold a very strict, hierarchical structure and has so far been unwilling to offer flexible working options, but recently its noticed that this has negatively affected recruitment and staff retention. Absences are also up and engagement is low. Enough's enough: your organizational design needs to change if you are to continue to attract and retain the talent you need to stay competitive. Types of Organization DesignOrganization Design is often divided into two distinct styles:
The table below shows some of the key features of hierarchical and organic designs – examined in terms of complexity, formality, levels of participation, and communication styles.
It's worth emphasizing that one isn't intrinsically better than the other. Organizations need to choose a design that matches their strategies and goals, suits the environment they're operating in, and is right for their people. It's also possible to mix elements of both styles, or to emphasize one or the other at particular times, or in specific areas. There's a good example of this in our Book Insight podcast on "Holacracy," a tightly organized system that also allows for creative connections. Hierarchical Organization DesignsHierarchical organizational designs often fall into two main categories:
Organic Organization DesignsOrganic organizational designs include:
Note:Recently, trends in organization design have moved away from linear, top-down approaches, and toward more organic (but often more complex) structures. This has resulted in new designs emerging, such as:
How to Use Organization DesignThe complexity and scope of Organization Design means that it's usually the responsibility of the senior management team to implement it. But many organizations find that a collaborative approach across all levels is essential for organization design to be truly effective in the long term. But for those who get to shape the Organization Design process itself, how should they go about it? 1. Consider the ImpactFirst, you'll need to consider the impact that a change in your organization's design will have by assessing it against a number of factors. These include:
Note:Organization Design encourages you to focus on what your company is doing. But it's also important to consider its relationships with other organizations, and how they may be affected by any changes. For advice on this, see our article, How Businesses Work Together. Get the Free NewsletterLearn essential career skills every week, plus get a bonus Essential Strategy Checklist, free! Read our Privacy Policy 2. Create a Collaborative Plan of ActionOnce you've considered these and any other relevant factors, you'll likely have a suitable structure in mind. So the next step is to ensure that you've selected the most appropriate options, and to create an action plan to help you put the new design in place. There are a number of tools to help you to do this, such as SWOT and PEST analysis, using focus groups and surveys, internal audits, and collaborative process reviews. Doing this will also enable you to gain buy-in from people across the organization, and ensure that it suits the purposes of both the organization and its employees. 3. Communicate and Provide SupportGood Organization Design involves not only changing the systems by which people work, but also supporting people to adapt successfully. For example, your analysis might persuade you to move to a matrix structure. But that won't succeed unless people get support to work outside their former departments. You'll need to ensure that communication is clear and effective, and that performance management approaches are relevant and fair. With your ideal design in mind as a map to follow, draw up a clear plan for the way it will work in the context of your organization. Be precise about roles and responsibilities, and define exactly how your new systems and processes will operate. Then, organize your people to follow this new design. There may be changes in personnel and working locations. Make sure that everyone's practical needs are met, allowing them to perform their role in the organization. You'll also need to check that all the necessary support functions are in place, and that you have a plan for successfully managing change. Tip:The new design will have implications for every area of the business. Ensure that you take into account the impact on customers and suppliers. Check that your IT resources and communication processes are fit for purpose. And think what it will mean when you're next recruiting and onboarding new hires. Whatever model you're working to, ensure that the management structure is in place to launch the new design, and to support it in the long term. And keep returning to your reasons for changing. Ongoing analysis of performance measures and business-level results will show whether your new organization design is working, and alert you whenever further changes are required. Key PointsOrganization Design is a process for shaping the way your organization operates, to help you to pursue your strategies and meet your goals. It involves setting up structures and systems, as well as helping people to adapt to new ways of working. Typically, there are three key triggers for Organization Design: a change in the environment, a change in strategy, or a current design that is no longer fit for purpose. Organization Design is generally divided into two main approaches:
There are three key steps that can help you to implement a new organization design. These are:
Is the management function that includes designing the structure of the organization?What is *Organizing*? A management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives.
What is the management function of organizing?Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives.
Which of the management functions determines the organization's goals and develops strategies for achieving them?STRATEGIC PLANNING is done by top management and determines the major goals of the organization and the policies, procedures, strategies, and resources it will need to achieve them. i.e., POLICIES are broad guidelines for action, and STRATEGIES determine the best way to use resources.
Which management function evaluates and determines alternate actions when goals are not being met?7-51. Contingency planning involves developing alternative courses of action to be used if the primary plans do not achieve the desired results. 7-62.
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